Remy Cointreau Shares Decline on Lack of Revenue Guidance

  • CEO says all markets are too volatile to make a forecast
  • French distiller’s operating income meets analyst consensus

Remy Cointreau SA shares fell after the company said it wouldn’t give a specific sales forecast for the next fiscal year, citing volatility in all regions.

Although the distiller has “hit the bottom” in China, macroeconomic uncertainty around the U.K.’s potential exit from the European Union and a fiscal crisis in Nigeria have made markets more difficult to gauge, Chief Executive Officer Valerie Chapoulaud-Floquet said on a call with investors.

The Paris-based spirits maker forecast higher profit this year from its continuing businesses, but the guidance was vague, Nik Oliver, an analyst at UBS, said in a note. The stock fell as much as 4.8 percent in Paris, the steepest decline in over five weeks. The shares had gained 17 percent in the past two months.

Remy Cointreau said it’s confident in its strategy of moving upmarket and focusing on spirits priced at $50 or more per bottle. The company is also raising prices in China, as that market recovers. Hennessy owner LVMH has also signaled a gradual return to growth after two years of falling demand in China, while rival Pernod Ricard said it expects to see some margin erosion in the country this year.

“Momentum seems much better for Remy at the moment than in the recent past, but visibility on near-term future cognac demand in China remains low,” Eamonn Ferry, an analyst at Exane BNP Paribas, said in a note. While cognac has been a good story for the company this year, driven by sales in the U.S. and in Africa, Cointreau will face a headwind next year after Campari’s acquisition of rival liqueur brand Grand Marnier, said Laurence Whyatt, an analyst at Societe Generale.

Full-year operating profit rose 6.1 percent on an organic basis to 178 million euros ($203 million) in the 12 months through March, matching the analyst consensus.

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